At Brussels, Its All About Stockholm, Tallinn & Euro

Written by Malcolm Subhan | Brussels, Sept 15: | Updated: Sep 16 2003, 05:30am hrs
It was not Cancun but Stockholm and Tallinn which have held centrestage here. The plain truth is the EU and the US, for that matter, can probably survive the collapse of the talks in Cancun. India, however, may find itself the likely victim.

Failure at Cancun does not mean that the Doha Development round of trade negotiations has collapsed altogether. But it does mean that when industrialised and developing countries return to the negotiating table, it will be in order to speed up the negotiation of regional free trade agreements (RFTAs) and bilateral free trade agreements (FTAs).

The EUs Trade Commissioner, Pascal Lamy, had refused to entertain demands from developing countries, notably Asean, for a free trade agreement. The agreements that he is currently negotiating, with a group of Latin American countries, for example, began before the launch of the Doha Development round. He may now re-think the whole issue.

India clearly will be an important loser if the WTO, with its 148 members, is marginalised, and a multilateral framework for the conduct of world trade is replaced by a network of bilateral and regional agreements. The plain truth is that India is likely to find itself isolated in the on-going rush to conclude regional and bilateral free trade agreements. The one regional agreement of which India is a member is in limbo. It is Saarc, of course.

The EU, however, can pick and choose when it comes to its potential free trade agreement partners. It is already negotiating regional agreements with the 73 African, Caribbean and Pacific countries to which it is linked through the Cotonu trade and aid agreement. It may now look more favourably on the Asean demand.

But work on the post-Cancun strategy will only begin after Pascal Lamy and his fellow Commissioner for agriculture, Franz Fischler, return to their headquarters here. The prospects are not encouraging. The EUs chief trade negotiator, Pascal Lamy, did not beat about the bush. Cancun, he declared, has failed. Had the talks succeeded, we would all have gained. Because they collapsed, we all lose.

Mr Lamy refused to play the blame game, however. He was determined, in fact, to look at the situation in as bright a light as possible. We came here to reach 50% of the negotiation, and we are back to 30%, he said.

The EU, in other words, will return to Geneva and the Doha Development round of trade negotiations, with an open mind, indeed, open to reviving this (negotiating) process.

In any case, EU countries will be less concerned with the fallout from Cancun than with developments nearer home. Sweden, after all, is one of the members of the 15-nation European Union (EU). And it is one of the three countries that has yet to sign up to the EUs single currency, the euro. The others are the UK and Denmark.

The fact that the Swedish people have now voted against joining the euro, has serious implications for not only the single currency but also the EU itself. Two key eurozone economies are facing a recession; they are France and Germany. Mr Lamy obviously was in no position in Cancun to make fresh concessions on agriculture, as they would have been at the expense of French and German farmers.

The Swedish decision to stay out of the eurozone will obviously impact on the debate in the UK. Tony Blair will find it virtually impossible now to persuade the British people that it is in their economic interest to adopt the euro. A referendum on the euro is now unlikely for the next two or three years.

The very bad news from Stockholm is hardly off-set by the good news from Tallinn, the capital of Estonia. Estonia is one of the 10 countries that is set to join the EU next May.

The decision of its people to join the EU, by an overwhelming majority, is important. It demonstrates that the EU is a clear favourite with Estonia, which nevertheless is a lightweight, with a population of just one million and a 0.1 per cent share of world trade.